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The hidden truth behind rising prescription costs

The only pharmacy in St Germain closed last month.

It had been there for more than 40 years.

The reason why it went out of business is complicated, and it includes a type of business you’ve probably never heard of. 

Pharmacy benefit managers, also known as a PBM was originally created in the 1960s to negotiate lower prices for drugs between manufacturers and pharmacies. But slowly they became much more than that. They now act as middlemen, also adding fees and buying out their competition. 

Take a look at insulin for example. It only takes at most 6 dollars to produce, but it can cost hundreds of dollars to diabetics largely because of PBM. Three of them, specifically that now dominate the market, OptumRX, CVS Caremark and Express Scripts. I visited the Eagle River Hometown Pharmacy to learn how this is affecting the health care system.

“It's horrible, it's very horrible,” said Amanda Altamore of St. Germain. She said she had to get a ride to the Eagle River Hometown Pharmacy location just to get her prescription.  

“I feel really bad for our elderly who have been going there forever and people like me who don't have a car.” 

Larry Thompson, Managed the Hometown pharmacy in St. Germain for 18 years and said  closing it down has been absolutely heartbreaking. Leaving, elderly, disabled, and needy people without near access to potentially life saving medications. 

“We just feel horrible that it came to this, it's not fair, it should not have come to this, but big corporate healthcare has basically squeezed us out of business,” Said Thompson. 

Dan Strause, CoFounded Hometown Pharmacy. It now has over 70 independent pharmacies focused on personalized patient care. Strause said difficulty finding a pharmacist at the St. Germain location was the final straw. But that wasn't the root of the problem. 

“Everyday we have patients that come in in tears because they can't afford their medicines,” said Strause.  

PBMs  have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, inflating the amount that people pay for prescription drugs and determining how much pharmacies are paid.

“It's a terrible Scheme that is basically why America has the highest drug prices, and PBMs are at the heart of it, and they enjoy this position of nobody even knowing they exist, much less what they do,” Said Strause.  

PBMs function as middle men between insurance providers and pharmaceutical manufacturers and they are profiting from both. 

“Basically a business that 99% of people have never heard of is negatively impacting their access and their cost to prescription medicines,”Said Strause. 

PBMs growing influence has been directly felt by Larry Thompson.

“There was a squeeze here and the next year there’d be another squeeze. It seemed to be a coordinated effort between all the PBMS, they would lower their reimbursements by roughly the same amount each year. And now with these DIR fees, that has been just a horrible situation. It's been like a death by a thousand cuts every year it gets tighter and tighter. It's gotten to the point where many of the prescriptions we fill were not even getting reimbursed for the cost of the product, much less any type of profit margin,"said Thompson.

DIR fees from PBMs were relatively minor 10 years ago... but have exploded by over 100 thousand percent since then. Strause said the average pharmacy gets hit between 75-150,000 dollars a year in DIR fees, just because they can. 

Another issue Hometown Pharmacy has to overcome is called steerage. The large PBMs that own 85% of the market often own big chain pharmacies, so they will send patients to THEIR pharmacies to make more money... even if they're much farther away.

“Even if there's a saint germain pharmacy right next door you have to go to CVS 75 miles away and the insurance card in your pocket tells you where to go. You no longer have free choice as a consumer,” said Strause. 

Strause also says. PBMS are moving towards mail orders which take out personalized care and increase the risk of climate controlled medications being ineffective or unsafe to consumers. 

“In our Pharmacies we have to maintain temperatures and climate control because what you put in your body is pretty important, so if the chemistry changes it could impact you,” said Strause. 

Strause says this is a problem everyone should be made aware of. 

“I think the more people know the more they can and should be angry about it and they can tell their legislators this is something that needs to be rectified,” said Strause. 

Legislators being involved will force transparency, with transparency comes the inability to spread pricing. Also allowing  people to choose which pharmacy they want to go to and to restrict PBMS from paying their own pharmacies more than the competition, because there is supposed to be separation of duties between PBM and paying for pharmacy network not to be united to use this power at the behest and detriment of society here. Saint Germain is a great example, where do those people go now for pharmacy? They have to travel now to Minocqua, Eagle River or Rhinelander. Strause said they are happy to serve, but it's unfair to people to have to travel or have to establish new relationships when it comes to their well-being. 

Late in 2023, Senator Mary Felzkowski helped introduce the Pharmacy Benefit Manager Accountability Legislation. It's designed to empower patients and protect pharmacies from unjust practices by PBMs.

Reporter: Shauna Johnson

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